Charities now free to engage in non-partisan political activities

Canada Revenue Agency building. Photo: Chris Fournier/Flickr

Charities are now free to engage in non-partisan political activities.

That's the explicit message of the Ontario Superior Court in its decision this week.

What a huge relief to those many charities that suffered through Stephen Harper's politically motivated Canada Revenue Agency audits!

While Justin Trudeau promised reform, and did suspend action on those audits, he has yet to deliver reform.

But the court did.

The application to the court was brought by a small charity, Canada Without Poverty, after Canada Revenue Agency (CRA) threatened to take away its charitable registration, alleging that virtually all of its activities involved political engagement.

The charity argued that the constraints on charities' political activity set out in the Income Tax Act, and in CRA policy, violated its constitutional right to freedom of expression, and should therefore cease to have effect.

That boldness paid off: Justice Edward Morgan, a former University of Toronto law professor, entirely agreed with the charity.

In some ways, this is a case of the right judge in the right court at the right time.

Justice Morgan was clearly the right judge: he had previously, as a law professor, defended then Toronto school trustee (and now city councillor) Josh Matlow's refusal to apologize for criticizing a school board's spending decision, stating:

"I think Matlow is doing exactly what we want school trustees to do. He's speaking his mind and speaking in criticism of board decisions. That's why we elect independent thinkers."

Here, with broad strokes, he readily dismissed CRA's narrow and old-fashioned definition of charitable activities, writing that:

"a registered charity, has a right to effective freedom of expression -- i.e. the ability to engage in unimpaired public policy advocacy toward its charitable purpose.

It would be difficult to express the importance of this Charter right any higher than the Supreme Court of Canada has put it; freedom of expression "is ... 'fundamental' because in a free, pluralistic and democratic society we prize a diversity of ideas and opinions for their inherent value both to the community and to the individual."

The right court? Instead of appealing CRA's adverse decision to the Federal Court (which is notoriously unsympathetic to charities' arguments), the charity boldly applied to the Ontario Superior Court, which has the jurisdiction to address violations of the Charter of Rights and Freedoms.

And it was the right time: the reform promised by Justin Trudeau has stalled.

The Consultation Panel, appointed by Trudeau in October 2016 to recommend policy changes on this issue, worked quickly and delivered its report on March 31, 2017.

That report recognized that a key principle with respect to charitable activities is that public advocacy and charitable works go hand in hand in a modern democracy. It stated:

"The participation of charities in public policy dialogue and development should be recognized and valued, and seen as an essential part of the democratic process."

And it found that the restrictions on political participation were outmoded and required legislative change:

"Legislative change is required to broaden and simplify the requirements for charities and to remove other obstacles to their contribution to society that are unnecessary and counterproductive."

It then recommended that the Income Tax Act be amended by:

"... deleting any reference to non-partisan 'political activities' to expressly allow charities to fully engage, without limitation, in non-partisan public policy, dialogue and development, provided that it is subordinate to and furthers their charitable purposes."

By finding that provision unconstitutional as a prohibited infringement on freedom of expression, Justice Morgan has done Trudeau's work for him.

There is some irony here. The now‑impugned section of the Income Tax Act was enacted by the Mulroney government in 1985 to give charities some limited scope for political activities.

They had none before.

That limited scope was designed to "ensure that (political) activities do not predominate," according to then minister of national revenue Perrin Beatty.

Justice Morgan, however, saw it this way:

"It is obvious, however, that what the Attorney General sees as permissive the Applicant sees as prohibitive. That is, to 'permit' 10 per cent of an organization's resources to be devoted to public policy advocacy is to prohibit 90 per cent of that organization's resources from being devoted to public policy advocacy.

The wording of the section of the statute, the administrative interpretation given to the section by CRA, and the evolving recognition of the importance of charities' engagement in public policy and law reform advocacy, the objective of [the rule] is a confusing one. The legislative purpose appears to be to minimize the very activity that the government supposedly wants to foster -- a registered charity's ability to participate in public policy dialogue where these activities advance its charitable purpose."

It is refreshing to see such solid recognition of the role the courts can play to reform law to reflect the evolution of our society.

The question now is: will Trudeau allow this decision to stand, or will he appeal?

If he chooses to let it stand, this much-needed, broadly supported, and long-sought change becomes law.

Any appeal would confirm that the Trudeau government's early enthusiasm for change has dissipated entirely.

Pro Bono provides legal information designed to educate and entertain readers. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. While efforts are made to ensure the legal information provided through these columns is useful, we strongly recommend you consult a lawyer for assistance with your particular situation to obtain accurate advice.

Submit requests for future Pro Bono topics to probono@rabble.ca. Read past Pro Bono columns here.

Photo: Chris Fournier/Flickr

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